Bond Funds Load Up on Cash

Portfolio Managers Gird for Volatility Amid Expected Rate Increase

Large bond funds are holding the most cash since the financial crisis as portfolio managers brace for potential price swings and unruly trading ahead of an expected Federal Reserve rate increase in 2015.

The top 10 U.S. bond funds by assets held an average 6.6% of their portfolios in cash at their latest reporting date, said fund tracker Morningstar Inc. That is double the sum they set aside last year and the most since 2007.